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A Tractable Model of Reciprocity and Fairness

Author

Listed:
  • James C. Cox
  • Daniel Friedman
  • Steven Gjerstad

Abstract

We introduce a parametric model of other-regarding preferences in which my emotional state determines the marginal rate of substitution between my own and others' payoffs, and thus my subsequent choices. In turn, my emotional state responds to relative status and to the kindness or unkindness of others' choices. Structural estimations of this model with six existing data sets demonstrate that other-regarding preferences depend on status, reciprocity, and perceived property rights.

Suggested Citation

  • James C. Cox & Daniel Friedman & Steven Gjerstad, 2006. "A Tractable Model of Reciprocity and Fairness," Experimental Economics Center Working Paper Series 2006-05, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
    • Handle: RePEc:exc:wpaper:2006-05
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    File URL: http://excen.gsu.edu/workingpapers/GSU_EXCEN_WP_2006-05.pdf
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    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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